Bertelsmann Gives P2P Another Try

German media giant Bertelsmann reportedly pumped $85 million into the beleaguered Napster between 2000 and 2002, before Napster finally declared bankruptcy and its remains were scooped up by Roxio. So what did Bertelsmann get for its $85 mil? The short answer is, nothing. However, Bertelsmann did get something from its dalliance with Napster: a profound respect for P2P technology and its potential for content distribution (especially of large media files). In fact, Bertelsmann apparently finds peer-to-peer so compelling that it has been willing to write off millions and start from scratch. The company has announced a new P2P file download platform called GNAB, set to officially launch around June. Gernot Wolf, spokesman for Bertelsmann subsidiary Arvato, says, "There is no relation between GNAB and Napster. Not a single line of Napster code was used while developing GNAB."

According to Wolf, what sets GNAB apart from the P2P pack is that it combines centralized and decentralized download. "There are a lot of P2P platforms and a lot of centralized download platforms, but we think we are unique in combining the two," says Wolf. This combination "opens new possibilities for the delivery and protection of content," he says.

Of course, decentralization is what gives P2P its power. "By splitting files into pieces, you can make good quality downloads and also make it economical," Wolf points out. The alternative—central downloading—is more problematic. "If you are centralized and you have a lot of clients, what if they all want to download the same movie file at 7:30 for their evening entertainment?" Wolf asks rhetorically. "You'd have 400 people, let's say, wanting the same file at the same time. You'd need a huge network to do that," he says. High user demand like this "produces the paradoxical situation that the more customers use a central system, the higher the distribution costs become."

Despite its downside, some centralization is necessary, says Wolf. It is the part of the puzzle that Napster left out and that led to its demise. It is GNAB's centralization that permits it to track its users to make sure content isn't stolen. "The central session control guarantees protection of copyrights and regulations of the licensors at all times, and ensures high quality of the files," says Wolf. With GNAB's digital rights management system, "Every file is signed," he adds.

However, in order to share in the power and convenience of GNAB's P2P network, one has to become an authorized part of that network through registration. Unfortunately, this centralized registration that enables DRM requires a big sacrifice. One must give up what is perhaps P2P's most popular feature—file sharing. "Yes, it is correct that a user cannot forward a file along to a friend," says Wolf. "But what a user can do is forward a link to specific content to a friend. So in this case, he can get an incentive for forwarding the link."

Avarto is aiming its GNAB service at ISPs, TV stations, radio stations, order houses, and mobile operators. Wolf calls these the "first row," or first tier of potential clients, though he feels that almost anyone who owns content could benefit from GNAB. Many companies, both large and small, could use P2P media distribution as a means of promotion. A big fast-food restaurant, for example, could offer free ringtone downloads to anyone who has accumulated $50 worth of receipts. The possibilities are endless, according to Wolf.

GNAB has completed beta testing and now is going through what Wolf calls "technical due diligence" testing with an unnamed client/user. Avarto expects an announcement from its first client within a few weeks. You can pronounce it "genab" or spell it out like an acronym, but the company says the name really doesn't stand for anything. The fact that it includes the word "nab" may bring to mind Napster's darker side, though Wolf notes with a chuckle that if you reverse GNAB, it spells BANG.

"Bang for the buck" may not have a literal translation in the German language, but Bertelsmann clearly sees that P2P offers content owners a bigger bang for their Euro, and the company obviously hopes that its investment in P2P will translate into bigger bucks, Marks, and Euros in the long term.